Securities financing available to overseas buyers

August 2, 2004

To attract more foreign investment in Taiwan's capital market, the Bureau of Monetary Affairs, Financial Supervisory Commission has revised its rules to allow domestic financial institutions to advance NT Dollar payments to make up the cash position needed for the settlement of payments for the purchase of domestic securities by foreigners outside of Taiwan. After the new rules are implemented, overseas Chinese and foreign nationals overseas who invest in domestic securities and face problems settling their payment because of the time gap will be able to have domestic financial institutions make advance NT Dollar settlement payments for them in accordance with relevant regulations. The amount of such payments, however, may not exceed the amount needed to make up for the insufficiency of settlement payment. This liberalization will allow foreign investors to purchase stocks first and then arrange to make up their payments by deploying funds from elsewhere, thus greatly reducing the risk of settlement violations and allowing for greater flexibility in the use of foreign capital to invest in the Taiwan stock market.

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